Main Cross-Cultural Issues in Managing the Organization Internationally - Essay Example

Business Essay Business Essay Management Culture in India The management practices in India are based on contingencies because several business entities give less focus on planning for future possibilities. There is also a lack of employees’ performance measurement due to the limited financial resources so such business entities having a concept that measuring workers output is unnecessary. There are also firms which focus on the employees’ performance measurement and they are highly profitable. It will take several months, but after adapting such measurement practice the firms’ productivity will move to upward (Bloom et al., 2011). Indian management in several organizations give less focus on team based evaluation they focus on individual targets because they are more concerned to evaluate each worker’s quality work (Shrivasta & Shrivastava, 2012). Economy The retail market in India is projected US$ 26 Billion in 2011 and is expected to grow to US$ 84 Billion by 2016 (Technopak, 2011). According to the US commercial services Indian per capita expenditure on cosmetics is Rs, 30 and the cosmetic industry are growing at the rate of 15% every year (Department of Commerce, 2012). These facts and figures supports to the product category because the industry is growing, and holds the chance for active cosmetics to step in (Department of Commerce, 2012). Management Practices and Reception from the external environment Multinationals and local companies are giving much emphasis on workforce management practices (Bidwaikar & Kavishwar, 2012). Multinational companies outsource its distribution to the third party. For example, P&G outsource its distribution to Agility logistics. Departmental stores will welcome us like Star India Bazar, Big bazaar, Max hyper market, Vishal mega mart, easy day, city mart, which shows that we have a possible chance to excel in the Indian cosmetic market segment (School of Management Studies,Punjabi University, Patiala, 2009). The Indian government supports to the foreign brand (whether imported or locally manufactured) in India is freely allowed and just have to pay up to 2% on export and 1% on domestic sale (Trade Net Global, 2010). India is a large diversified country and to become successful in this market we need to obtain comprehensive localized information. Due to a large market we will require multiple distributors to cover the whole market. In India, DAC, 1940 (Drug and Cosmetic Act) is followed for the import, sales, manufacturing and distribution of cosmetics. There are also multinational distributors like agility logistics, which are present in five cities of the country including Ahmadabad, Bangalore, Baroda, Chennai and Cochin. This will provide us a room to take our cosmetic business in the major parts of the country (Thirumalai, 2001). Cultural profile-Pakistan We have chosen Pakistan another country to operate (Chandio, 2012). As per great resemblance in the socio-cultural values, economy and large number of cosmetic consumers, we could apply the same marketing tactics in Pakistan as in India market segment (Chandio, 2012). Kinship People living in Pakistan also prefer nuclear family which means that all members of the family live together in the same house, and keep their family first in all social relations. Like India older age people deals in all family matters and take the positions as family heads at their homes (Chandio, 2012). All this will help at the time of communication and advertising our brand in the Pakistan region. Hence the marketing campaigns will be compatible in both countries, reducing the marketing expense and additional investment (Chandio, 2012). Economy Like India, Pakistan is also an agricultural country and it is a core competency of the nation. There is large growth in personal care industry because of the growing urbanization and population growth and there is the presence of potential consumer base for beauty products (Andrew, 2011). The local market of skin care is valued about Rs. 8.5 billion and grew 30% last year alone (Andrew, 2011). Here are also good growth chances in this sector (Andrew, 2011). Management Practices and Reception from the external environment Like India, there are also outsourcing concept in multinational companies and there are leading logistic companies performing their task to distribute products according to the clients’ requirements (Technopak, 2011). There are also distribution companies like Agility Logistics and Abudawood so the product of Active Cosmetics easily be distributed all over the country. In addition, there are well known shopping malls, retailers and departmental stores like Park Tower, Forum, Imtiaz Super Store, Chase up (Luscious Cosmetics, 2012). Organization Chart and Work Structure The company will set a work distribution structure which is effective in removing the gap of communication and to incarnate the organization key operations in a cross-cultural business environment (Silverthorne, 2005). Our company being a retailer cosmetics company will allocate a cross-cultural management system, where the head-office of the company (Wembley Central London) will directly connect to sub regional offices (India & Pakistan) to operate. The central objective of designing the organization structure would be to bring the effective supply chain system for the company (Bhattacharyya, 2010). The system is going to address the cross-cultural challenges and the problems to engage the business with an unfamiliar consumer environment (Nilsson, 2010). Here is the organization chart representing an integrated design and work distribution structure: Evaluation of Management Practices In international organization management, there are some key areas to be managed (Gelfand et al., 2006). The core challenge is to understand the norms of Ahmadabad cosmetic industry, including the regulations and laws to launch a cosmetic franchise. The active cosmetic company with respective work structure will first take decisions from the board of directors including the CEO and general managers of the regional offices (Haghirian, 2010). Like in the Ahmadabad region, the decisions will be put forward by site general managers to the operational managers and then to the execution team (Moran et al., 2011). This will remove the delays on the decisions as executors will become directly associated with the top leadership concern (Daft, 2009). The operations will be managed and controlled by two departments, the quality department which will check and control the quality of items purchased, and second the marketing department which will manage and engage the marketing research activities (Jacob, 2007). Technical department will deal the local suppliers and distributors (Czinkota et al., 2008). Here the central objective would be to bring cost effective products. In Ahmadabad the company will get associated with low cost and better quality suppliers like Agility logistics, Fancy India Corporation, Kapoor Herbal Products, Osian International or Rangoli Industries, which will provide the best in both herbal and non-herbal cosmetic items (Mongabay, 2012). The regional quality mangers will be responsible to bring the best quality and cost on items, where the company will appoint the most comprehensive, qualified and communicable employees in the region. In Ahmedabad, a major city of cosmetics business, multinationals often apply their native operational language which is Hindi, but as organization spreads out like in the external environment they have to understand the local language communicators like Gujrati, Marathi, Rjisthani, Nipali, Punjabi, and Bengali respectively (Daft, 2009). The active cosmetics company will appoint local managers, who understand the culture, traditions and norms of the labors. Like in India the national language is Hindi, in which 60 to 70% population can understand and speak English; meanwhile the company will deploy managers holding command on languages and have the ability to deal the native employees (Department of Commerce, 2012).  Staffing Policy and Motivation There are conventionally three types of staffing policies that can be applied in a cross-cultural business environment (Czinkota et al., 2008). The first type is ethnocentric staffing policy which only prefers parent company employees in the host company region. The second is polycentric which deploys the domestic employees in the subsidiaries, while keeps parent company managers at the main headquarters region (Scullion, 2006, pp.31). The last and the most flexible is geocentric policy, which only prefers skilled workers regardless of where they belong or have come from. Our company will consider both polycentric and geocentric policies on the administration (Daft, 2009). The geocentric policies will bring us to the right cross-cultural specialists, while polycentric policy will help us to find the region wise professionals (Scullion, 2006, pp.31). This will save the labor cost as in Ahmedabad the domestic employees will charge much less as compare to workers of UK (the region of headquarters). Plus the domestic employees will have the ability to understand the local business trend, which will save the cost of extra training required by the parent company employees, if deployed at the host regional sites (Scullion, 2006, pp.31). The salary and wage policy would imply the host country standards, while extra work payments and compensations will be according to the UK wage policy (Daft, 2009). This will be to promote the host country executives and to motivate them on diversified working conditions in Ahmedabad. Decentralized and departmental decision making will entirely be promoted in the organization work structure, which is a king of trend in Ahmedabad cosmetics sector (Daft, 2009). This will create a higher sense of responsibility and decision making authority in the top level and middle level management of the host country franchises. Additional benefits and compensations will be distributed quarterly and annually to motivate the top level administrators (Czinkota et al., 2008). This is how by empowering employees and their decisions, the company will have the higher sense of motivation, making us achieve what we want to achieve on the host country markets (Gelfand et al., 2006). Leadership on the Cross-Cultural Spectrum In a cross-cultural spectrum and in a diversified consumer behavior market, the active cosmetic company will include three famous styles of leadership and that are cross-cultural leadership, strategic leadership and the team leadership respectively (Griffin, 2011, pp.348). The cross-cultural and team leadership will reflect a transformational style of leadership that will inspire, motivate and prepare the employees to work on the long term organization goals (Griffin, 2011). The adaptation of cross-cultural leadership will help and support the managers present on the host company grounds (Bhattacharyya, 2010). It will help them to come up with a diversified marketing approach, and to engage the employees by giving the best reward in their activities. Strategic leadership style will be helpful for the top levels to capture market on the cross-cultural spectrum (Silverthorne, 2005). The primary aim of the company would be to adapt leadership styles from top to bottom in an organization. This will give a direction, an objective and a vision to bring the organization on the cross-cultural grounds of the business (Griffin, 2011, pp.348). Communication Problems in Host Region As we know that in both countries, where different languages spoken and this could be a serious problem, but it could be solved easily if we think locally. In India, there are many languages like Hindi, Gujrati, Marathi, Rjisthani, Nipali, Punjabi, Bengali etc. In Pakistan, Spoken languages are Urdu, Punjabi, Sindhi, Balouchi, Pashto, Siraiki, Kashmiri, Gujrati etc. (Ethnologue Languages of the World, 2012). This communication problem could be resolved if we just focus on the communication medium like different TV channels with different languages. What we need to do is localize the brand on TV channels and news Papers in different languages so that the potential customers will realize the brand as their own brand and marketing messages to the customers would be more understandable (Ethnologue Languages of the World, 2012). Concerns of the Host Region According to the market trend and business culture of both India, no multinational or cross-cultural company can survive unless and until it holds a practically friendly ground and relationship with the major host companies (suppliers and distributors) (Griffin, 2011). It is in the culture of both soils, that native Indian only allows those business men who have a sense of social engagement and interaction (Memon, 2000). In this way, merchants are only welcomed when they have a close understanding of the cultures and an ability to build the trusts with the locals (Department of Commerce, 2012). With trust, active cosmetics will have a key to success as the company will be able to apply it as a source of developing customer relationship and workforce engagement (Silverthorne, 2005). This will also assist in developing relationship with the entire business chain of the locals (Memon, 2000). Special Control Issue in Host Region The child labor is the main issue in India and there is largest number of child laborers found in the country business practices. The reason for child labor is due to the poverty and lack of social security in the country (Tzu, 2012). The issue of child labor can be solved by applying UK regulations for child labor in our company operations. We will exclude the segment of child labor by adapting UK’s policies on work and labor administration. It would be part of our company policy of not to appoint any child in our work group, as that will violate the code of UK work legislations (Tzu, 2012). List of References Andrew, M., 2011. Aspiration of Beauty. 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Mason: Cengage Learning. Haghirian, P., 2010. Multinationals and Cross-Cultural Management. New York: Taylor & Francis. Jacob, N., 2007. Organizational Structure and Crosscultural Management. Vikalpa: The Journal for Decision Makers, 32, pp.63-69. Luscious Cosmetics, 2012. Store Locator:Karachi. [Online] Viewed at: http://www.iloveluscious.com/stores-in-karachi/14> [Accessed 7 December 2012]. Memon, N., 2000. Cosmetics industry in Pakistan. [Online] Viewed at: [Accessed 7 December 2012]. Mongabay, 2012. India Society. [Online] Viewed at: [Accessed 7 December 2012]. Moran, R., Harris, P. & PhD, M.S., 2011. Managing Cultural Differences: Global Leadership Strategies for Cross-Cultural Business Success. London : Routledge. Nilsson, C., 2010. Managing Challenges in an Unfamiliar Business Environment. Research Report. Frederiksberg: Copenhagen Business School. PU, 2010. India. Research Report. Patiala : Punjab University. School of Management Studies,Punjabi University, Patiala, 2009. 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